Obamacare costs more than advertised, double-counting edition

I’ve written many times about the budgeting/accounting/scoring gimmicks that allowed Democrats to claim Obamacare would reduce federal deficits when the opposite is true. The latest piece of evidence came from Charles Blahous, an economist and trustee of the Social Security and Medicare programs who recently reported Obamacare’s “double counting” of spending cuts and tax increases means the law will actually increase deficits by $340 billion over 10 years (or about seven Buffett Rules).

Blahous, writing with former federal budget official James Capretta in today’s Wall Street Journal, explains double counting by making an analogy to Social Security:

If we generate $1 in savings within that program, then that’s $1 that Social Security can spend later. If we also claimed this same $1 to finance a new spending program, we would clearly be adding to the total federal deficit. There has long been bipartisan understanding of this aspect of Social Security, which is why Congress’s paygo rules prohibit using Social Security savings as an offset to pay for unrelated federal spending.

No such prohibition exists in the budget process against committing Medicare savings simultaneously to Medicare and to pay for a new federal program. It’s this budget loophole, unique to Medicare, that gives the health law’s spending constraints and payroll tax hikes the appearance of reducing federal deficits. But it is appearance, not reality. If you have only $1 of income and are obliged to pay a dollar each to two different recipients, then you will have to borrow another $1. This is effectively what the health law does. It authorizes far more in spending than it creates in savings.

So, perversely, the “pay-as-you-go” rules that President Obama and congressional Democrats touted as a measure of their fiscal responsibility back in 2009 are precisely what allowed them to engage in this duplicity. Blahous and Capretta explain further:

When Congress considers legislation that alters taxes or spending related to Medicare’s Hospital Insurance Trust Fund, the changes are recorded not just on the Hospital Insurance Trust Fund’s books, but also on Congress’s “pay-as-you-go” scorecard.

The “paygo” requirement is supposed to force lawmakers to find “offsets” for new tax cuts or entitlement spending, and thus protect against adding to future federal budget deficits. Putting the Medicare payroll tax hikes and spending constraints on the “pay-as-you-go” ledger was instrumental in getting the health law through Congress, because doing so fostered a widespread misperception that the law would reduce future deficits.

But the same provisions add to the Hospital Insurance Trust Fund’s reserves, which expands Medicare’s spending authority. Medicare can only pay full benefits so long as its trust fund has sufficient reserves to meet these obligations. If the trust fund has insufficient resources, then spending must be cut automatically to ensure the fund does not go into deficit. The health law’s Medicare provisions prevent these spending cuts from taking place for several more years.

It’s another reason why “paygo” rules (or lack thereof) don’t necessarily make Congress fiscally responsible (or irresponsible). What makes Congress responsible, or not, is its willingness to spend no more than it takes in.

And when Obama and Congress pass a law to take in $1, count that $1 twice, and then claim the ability to spend $2, there’s no way to spin it as fiscally responsible.

– By Kyle Wingfield

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313 comments Add your comment

Edward

May 2nd, 2012
1:02 pm

Nobody gives a rat’s a** if poor kids starve, can’t get an education, or die outside the ER because the doors are closed to them. As long as SOMEBODY makes enough profit to afford a car elevator, that’s the American Way!

resno2

May 2nd, 2012
1:03 pm

So they lied… AGAIN!

Garbage in Garbage out

Ayn Rant

May 2nd, 2012
1:06 pm

More whining about the Affordable Health Care Act! It’s working fine in Massachusetts (where it’s called RomneyCare), so what’s wrong with it?

Can you cite some specific reasons why you don’t like the plan? Do you think people with prior medical conditions should be denied health care insurance? Is it wrong to extend health care coverage for young people under their parents’ policy? Should people not covered by an employee health care plan pay higher premiums than others? Should people who can’t afford health care insurance continue to overcrowd EMs so that persons with coverage receive inferior, life-threatening emergency care? Do people in wealthy states like Massachusetts deserve adequate medical care more than poor people in Alabama and South Carolina?

Forget the nickel and dime stuff about the federal health care budget! The government doesn’t have a budget. Those medical expenses will be incurred anyhow, whether paid for by the government, employers, individuals, or charities; who gives a damn whether they pay out of pocket or through their taxes for needed medical care?

And don’t cite lies about “government-controlled” health care! Medical care is provided and managed by the same doctors, hospitals, and clinics that private insurance plans and Medicare rely on.

resno2

May 2nd, 2012
1:06 pm

Edward, what’s your American way? What would be the fair thing to do?

Rafe Hollister

May 2nd, 2012
1:06 pm

Illegal alien.
If everybody had HC insurance then those of us that have plans would probably get a break, since we would no longer be paying for those that don’t pay.

And you believe that, a little self deception, I’d say. Kinda like believing ole Barry, when he said, if you like your plan you can keep it, or when he said, this will lower premiums for everyone.

saywhat?

May 2nd, 2012
1:06 pm

“Liberals will never admit that they are going to bankrupt this country.”

Conservatives will never admit that they are going to bankrupt 99% of the people in this country.

“My guess it the s@@@ will hit the fan in the next 10 years.”

My guess is 8 years if the nightmare of a Republican White House, Senate and House materializes.

“This isn’t utopia…”

Nobody ever claimed it was.

“We can’t provide everything to everyone. We only have so much money”

Republicans appear to believe we only have enough money to make sure it all goes to the top 1%.

JDW

May 2nd, 2012
1:07 pm

@Kyle…”but in using the loophole to lie”

That’s your opinion on what’s happening. I expect reality is far more nuanced. You are mixing buckets of current savings vs. trust fund reserve calculations. If the reserves are never exhausted then the accounting is perfectly legitimate.

In any event, rather than railing on The Administration to tell your version of the truth, it would be far more appropriate to have a discussion on whether the loophole exists and should be closed.

Rafe Hollister

May 2nd, 2012
1:09 pm

Edward

Nobody gives a rat’s a** if poor kids starve, can’t get an education, or die outside the ER because the doors are closed to them.

Since when has that happened in the USA? Hope the rant makes you feel better, and the next time one of those things happens you let the AJC know about it and it will be on the front page.

Jefferson

May 2nd, 2012
1:11 pm

If you don’t share, you stand to lose it all. Socialism or a tax increase, you decide — the poor are starting to organize.

resno2

May 2nd, 2012
1:15 pm

Organize? Did yesterday’s May Day protests have any noticeable affect on ANYTHING?

@@

May 2nd, 2012
1:15 pm

Accidentally posted downstairs:

Reminds me of the hidden coin trick. The leftists are in awe of the magic but in reality, it’s theft by deception.

Kyle, I saw your post downstairs about jaywalking.

Can we refer to him as your next door neighbor? Your lesser half?

J/K

About this:

He’s not here to defend himself, and I’m asking you to tone it down.

He doesn’t give you the same courtesy…but then you’re the better man.

WORD! And it’s final.

schnirt

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:16 pm

Who wins a war between Constitutional government and the organized poor?

Rafe Hollister

May 2nd, 2012
1:17 pm

Jefferson@1:11

You prove a point made by the GOP with your comments. Democrats keep the poor on the plantation by providing for their every need and in turn getting all their votes. So, as you point out, if the poor ever learn their plight and organize, they can then blackmail their keepers for more benefits.

getalife

May 2nd, 2012
1:20 pm

Yeah, murdoch and his wsj are so credible.

Not.

@@

May 2nd, 2012
1:25 pm

“My guess it the s@@@ will hit the fan in the next 10 years.”

I always show up sandwiched in the profanity. I’m beginning to take it personally.

Try using some of these #&%~* instead.

TankU!

Ernest T. Bass

May 2nd, 2012
1:27 pm

Why is it that every other first world country in the world has universal healthcare and they are doing just fine ?

They spend less and get better results. They all have lower rates of diabetes and heart disease and their life expectancy is longer.

Sounds good to me.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:29 pm

If you don’t work, you stand to have less than those who do. Productivity or poverty, you decide — the rich are starting to consider New Zealand.

The Fresh Prince of Bill Ayers

May 2nd, 2012
1:31 pm

getalife

May 2nd, 2012
1:20 pm
Yeah, murdoch and his wsj are so credible.

Not.
I guess the AJC fulfills all of your Balanced (barf) needs.
The organized poor wont march for long, theyre too lazy!

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:31 pm

They spend less and get better results.
——–

They’re also not a bunch of dadgum lardazzes.

Jefferson

May 2nd, 2012
1:33 pm

1917, it was hunger not policy.

Illegal Alien

May 2nd, 2012
1:34 pm

Rafe, And you believe that, a little self deception, I’d say. Kinda like believing ole Barry, when he said, if you like your plan you can keep it, or when he said, this will lower premiums for everyone.

Single payer.Put everybody on a Medicare type plan, raise the fees for services by the provider and get rid of the robber insurance companies.

We’re already paying for universal health, except it costs about twice as much, because the providers just jack up their bills to cover those non/under paying patients.

Ernest T. Bass

May 2nd, 2012
1:34 pm

If you don’t work, you stand to have less than those who do. Productivity or poverty, you decide

Exactly. Stop blaming the government and Obama for all of your problems.

Its up to you to make a better life for yourself. Not blame Obama or expect the government to take care of you.

Its called personal responsibility.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:37 pm

Its up to you to make a better life for yourself with whatever is left of your income after Obozo gets done with you.
——–

Fixed.

Not Part of Romney's Flock

May 2nd, 2012
1:38 pm

“the rich are starting to consider New Zealand.”

For their Universal Health Care?

just kidding…….. hahahahaha

Finn McCool (The System isn't Broken; It's Fixed)

May 2nd, 2012
1:38 pm

Unemployment Reaches Record High in Euro Zone

Thank you Conservatives and your Austerity idiocy!

Ernest T. Bass

May 2nd, 2012
1:43 pm

Its up to you to make a better life for yourself with whatever is left of your income after Obozo gets done with you.
——–

Fixed.

More just blaming the government for your problems.

Find a mirror and look in it if you wanna know who is responsible for your life,

Hint: It isn’t Obama the President of the United States and Commander in Chief.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:43 pm

The rich don’t need universal health care. They pay their own way (and most of yours, likely).

Not Part of Romney's Flock

May 2nd, 2012
1:49 pm

Barry

I own my consulting business that does work in SCM, Logistics and Inventory Management

I have a BBA in Risk Management
APICS Certification
Six Sigma Black Belt

What exactly do you do and what is your education?

You are probably one of the water carriers FOR the and not the high end producers you talk about………….

Just another 60 to 80k or so career administrative or entry level manager crying about others and unable to see that it is your inability to move ahead or strike out on your own and take a risk

If that is not you……… great

Finn McCool (The System isn't Broken; It's Fixed)

May 2nd, 2012
1:50 pm

“Render unto Caesar what is Caesar’s and render unto the Cayman Islands what is the Cayman’s.”

~Colbert

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:50 pm

Finn McCool: Thank you Conservatives and your Austerity
———-

If government spending was keeping all those folks employed, austerity is not the problem–a sclerotic economy and rabid entitlement mentality (like we’re cultivating here) are.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
1:53 pm

If that is not you……… great
——–

60-80k? Sounds like my tax bill.

Finn McCool (The System isn't Broken; It's Fixed)

May 2nd, 2012
1:53 pm

I see you guys are still confused about what qualifies as “wealthy”.

If you hire a lawn service to cut your lawn you are not wealthy. IF you employ a full-time gardener, you are probably “wealthy.”

If you cook your own meals or eat out every day, you probably aren’t wealthy, IF you employ a full-time chef, you are probably “wealthy.”

If you frequently hire a maid service you are not wealthy. If you employ a full-time “house staff”, you are probably wealthy.

If you drive your kids to sports practices you sure aren’t wealthy, IF you employ a full-time chauffeur, you probably are wealthy.

The delusion of the middle class is that if you work hard and play your cards right, you’ll be able to join this group some day

Mwuahahahahahahahaha

Not Part of Romney's Flock

May 2nd, 2012
1:54 pm

Face it Barry

All you have is this blog and your employer’s computer to gripe on every day

Making yourself feel good by calling other people names…… I hope it is not the case, but maybe your parent’s demeaned you by calling you names so that is what you think is acceptable behavior and it acts as a coping mechanism for you

Get help…….. That company group plan you are under as part of your benefit plan should cover a therapist

Check into it…………

Take care Barry……………

real john

May 2nd, 2012
1:56 pm

saywhat? Blah, blah, blah…some old liberal excuses. The Rich, the rich, all of my problems are their fault…

Ernest T. Bass

May 2nd, 2012
1:56 pm

“An imbalance between rich and poor is the oldest and most fatal ailments of all republics.”

- Plutarch, Greek historian, c.100 A.D.

“The power of taxing people and their property is essential to the very existence of government.”

- James Madison, “Father of the Constitution,” “Father of the Bill of Rights, ” 4th President

“Why shouldn’t the American people take half my money from me? I took it all from them.”

- Edward Filene, founder of Filene’s Department Stores

“Those of us who have the greatest ability to pay are not being asked to. I am not keen on being part of the freeloader class.”

– Bill Collins, former Norwalk CT mayor, earned his wealth in real estate

“I’m not concerned about the very poor.”

Mitt Romney, Millionaire two-time presidential candidate, 2012

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
1:57 pm

Let’s see how many times Progressive Humanist can be wrong in just s single post, shallwe?

“And the funny thing is that the amoral sleazeball hicks like Barry and Tib will vote for Romney, who wrote the blueprint for ObamaCare.”

And yet despite Obama’s dogwashers saying he did, the differences in both plans are numerous, meaning that Romney actually didn’t write the blueprint of Obamacare.

“They want U.S. citizens to die so empty suits can make a profit (pretty patriotic by the way) and they’re going to vote for the empty suit who thought up the “socialist” health care plan to begin with.”

Repeating the same lie twice doesn’t make it any better, Prog. And no, I don’t want citizens to die at all. Just pay your own freight in this world.

“But because of their lack of intellect and education, Barry and Tib will be the ones who will need the social services like government health care, social security, etc. because they’ll never be able to make enough on their own”

Prog, I’m already retired and only 55. I have never taken a dime of money from any government except for that which I earned in salary. Can you say the same?

Illegal Alien

May 2nd, 2012
1:58 pm

The rich don’t need universal health care. They pay their own way (and most of yours, likely).

That’s why I’m an illegal alien, but I appreciate your contribution.

Can you increase your donation a little more?

Hillbilly D

May 2nd, 2012
2:04 pm

This is a surprise? What do they ever do that doesn’t wind up costing more than they claim? That politicians will pee in our ear and tell us it’s raining is as sure as the sun coming up in the East.

Ernest T. Bass

May 2nd, 2012
2:06 pm

Prog, I’m already retired and only 55. I have never taken a dime of money from any government except for that which I earned in salary. Can you say the same?

What do you want a medal ? A cookie perhaps.

The overwhelming majority of people can say the exact same thing.

I can.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
2:07 pm

“Why is it that every other first world country in the world has universal healthcare and they are doing just fine ?”

You do realize, Ernest T, that Europe is, by and large, imploding right now, don’t you?

Don’t you think an inability to continue to afford their social program structure might have a little something to do with it?

Tea Party Meber

May 2nd, 2012
2:09 pm

Im sick n tried of the librals tryin 2 take my money to help the helpless so much so I plan on votin 4 a morman.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
2:11 pm

“The overwhelming majority of people can say the exact same thing.”

Actually, you might have missed two points, Ernest T. (and typical for you btw).

Not many people can afford to be retired at 55, so you’re wrong about that.

And the latest numbers over the past year show that almost half of all Americans are on some type of government assistance, which puts to rest your “overwhelming majority” comment as well.

JohnnyReb

May 2nd, 2012
2:14 pm

Unfortunately, the facts Kyle lays out will fall on deaf ears. Liberals only want to be graded on and talk about their intentions, not the results and/or collateral damage. In this case, it will be how Obamacare gave health care coverage to all those who previously could not afford it. They just know that happened without increasing the deficit because Barry and Nancy said so.

Ernest T. Bass

May 2nd, 2012
2:15 pm

Not many people can afford to be retired at 55, so you’re wrong about that.

Sure they can. Lots of people do. Its really not that big a deal.

And the latest numbers over the past year show that almost half of all Americans are on some type of government assistance, which puts to rest your “overwhelming majority” comment as well.

I sure don’t know them. Nobody I know gets one dime from the government.

Ernest T. Bass

May 2nd, 2012
2:20 pm

Ernest T. Bass

May 2nd, 2012
2:23 pm

You do realize, Ernest T, that Europe is, by and large, imploding right now, don’t you?

Don’t you think an inability to continue to afford their social program structure might have a little something to do with it?

Most think its the extreme austerity measures are causing the problems.

But im sure you dont believe that.

http://economywatch.msnbc.msn.com/_news/2012/05/02/11503464-grand-plan-to-save-europe-is-unraveling?lite

Shine

May 2nd, 2012
2:24 pm

Lets boot some kooks! Vote democrat!!

AmVet

May 2nd, 2012
2:29 pm

Sure they can (retire at 55). Lots of people do. Its really not that big a deal.

The average retirement age in this country is 63.

So for the mathematically challenged, that means for those “lots” of 55 years olds who are retiring there is an equal number of 71 year olds as well.

Which is also apparently not that big a deal.

ragnar danneskjold

May 2nd, 2012
2:31 pm

Republicans have a plan to save social security – the Ryan plan. Democrats have a plan to save social security – “kick it down the road.”

ragnar danneskjold

May 2nd, 2012
2:32 pm

Republicans have a plan to cut spending: “cut spending.”
Democrats have a plan to cut spending: “increase spending and taxes.”